ECO101H1 Lecture Notes - Lecture 4: Toronto Transit Commission, Royal Ontario Museum, Demand Curve

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In response to an increase in price, total revenue: In this case, revenue increase exceeds revenue decrease, so total revenue rises as price increases. Two opposing forces when there is an increase in price: revenue increases because contiuning customers pay the higher price, revenue decreases because some customers will not pay the higher price. For an inelastic demand curve, 1 is greater than 2. For an elastic demand curve, 2 is greater than 1. 1 you own: ttc (toronto transit commission, 1 of 10 toll bridges across a river. For most users, there are few close substitutes [cars, for example, are too expensive to park] Demand is inelastic, so raise price [fare: toll bridge. There are 9 close substitutes, so demand is elastic. Do not raise price, since total revenue will fall. News: rom lowers prices to attract more visitors .

Related Questions

1. Clothing retailers often use sales, where some or all products are sold at a discount price, to increase revenue. What does this suggest about the price elasticity of demand for retail clothing?

A) It is elastic.

B) It is inelastic.

C) It is unit elastic.

D) This tells us nothing about elasticity.

2. If demand is inelastic, then increasing price will do what to revenue?

A) It is impossible to say.

B) Decrease

C) Increase

D) Nothing will happen to revenue.

3. If P increases from 200 to 202 and Qd decreases from 50 to 49, what is the price elasticity of demand? ___

4. If elasticity (i.e. price elasticity of demand) is -3, a 1.5% increase in price would lead to what change in quantity demanded?

A) a decrease of 3%

B) a decrease of 4.5%

C) an increase of 1.5%

D) an increase of 3%

5. If you know that the demand curve is given by: Q = 20-2P What is the price elasticity of demand if P = 4?

A) -0.666

B) -0.33

C) -1.33

D) -1.66

a. When demand is inelastic, an increase in price causes quantity demanded to ____ and TR to ____.

b. When demand is elastic, a decrease in price causes quantity demanded to ____ and TR to ____.

c. When demand is unitary elastic, an increase in price causes quantity demanded to ___ and TR to ____.

d. If the price falls and total revenue stays the same, demand must be _____.

e. If price rises and total revenue falls, demand must be _____.

ambertermite969

1. Grand TV Manufacturer wants to increase the quantity of TVs it sells by 8%. If the price elasticity of demand is 4, the manufacturer must:

a. decrease price by 1.5%.

b. increase price by 1.5%.

c. increase price by 2.0%.

d. decrease price by 2.0%.

2. Suppose that an Italian ice cream firm is facing a linear demand curve and that the current price for the Italian ice cream is set at a point where the price elasticity is 0.7. If the firm decreases the product price,

Select one:

a. the demand becomes less inelastic, and total revenue increases.

b. the demand becomes more inelastic, and total revenue decreases.

c. the demand becomes more inelastic, and total revenue increases.

d. the demand becomes less inelastic, and total revenue decreases.

3. Suppose that in a month, the price of movie rentals decreases from $3.25 to $3. At the same time, the quantity of movie rentals demanded increases from 100 to 120. The price elasticity of demand for movie rentals (calculated using the midpoint formula) is:

a. elastic.

b. zero.

c. inelastic.

d. unitary elastic.

4. The price elasticity of demand for color printers is 1.6, and you would like to see the quantity demanded of color printers increase by 32%. Then the percentage change in price should be:

Select one:

a. 15%.

b. 25%.

c. 10%.

d. 20%.

5. The price of apple increases from $1 to $1.10. At the same time, the quantity of apples demanded decreases from 100 to 90. The price elasticity of demand for apples (calculated using the initial value formula) is:

a. 0.9.

b. 0.02.

c. 1.1.

d. 1.

cyanspider596

ECO101H1 Lecture Notes - Lecture 4: Toronto Transit Commission, Royal Ontario Museum, Demand Curve

ECO101H1 Full Course Notes

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